1.2 Market

Question 1

factors leading to a change in demand (7)

Answer 1

• changes in the prices of substitutes and complementary goods
• changes in consumer incomes
• fashions, tastes and preferences
• advertising and branding
• demographics
• external shocks
• seasonality

Question 2

factors leading to a change in supply (5)

Answer 2

• changes in the costs of production
• introduction of new technology
• indirect taxes
• government subsidies
• external shocks

Question 3

factors influencing PED (5)

Answer 3

• availability of substitutes
• frequency of purchase
• the relative price/ expense of a product
• product a necessity/ luxury
• time

Question 4

factors influencing YED (2)

Answer 4

• whether the product is a luxury, necessity or inferior good
• expectations of changes in income e.g. loss of job, promotion, recession or economic growth